????"We are redeeming as much as we can and as fast as we can," says one investor who invested in Eton Park in 2008. To those who signed on that year, Eton Park looked like a winner. In 2007 Mindich had his best year ever, gaining an estimated 35% to 40% based on the subprime shorts that drove returns for folks like John Paulson and Kyle Bass. Then in 2008, the year of the market's freefall, Mindich impressed investors by losing a lot less than others: between 10% and 11%, depending on the share class.
????Eton Park raised about $2 billion in 2008, but all those investors have just about broken even, after paying fees. The end of 2011 marks the end of a three-stretch of lousy performance and bad market timing by Eton Park. Not only did it lose 11% last year -- far more than the average 5% among hedge funds and way below the S&P 500's break-even performance -- the loss followed two dismal years. Mindich was bearish for much of 2009, so he missed the great rally, ending the year with a gain of an estimated 5%. He chalked up about 9% in 2010, but last year his bullishness led him to load up on financial stocks, which tanked.
????Notably, he did worse than many of the funds whose founders also hailed from Goldman's risk-arbitrage desk. Dan Och's master fund was down .58%, Richard Perry's Perry Capital International declined 7.57%, and Frank Brosen's Taconic Capital event-driven fund fell 2.7%. Since inception in 2004, Eton Park has gained a little more than 7%, net of performance fees.
????In 2010, Mindich tried to entertain investors by channeling his inner star with a mock interview between himself and Charlie Rose at the annual investor meeting. More noteworthy to investors, however, was his decision to trim the lockup period to 13 months, with the three-year rolling lock -- but only for brand new investors. The firm also introduced what it calls a "look back" period, which allows investors to change their mind and decide to take their money out 60 days after the required notice period. There's a catch: Instead of taking out a third of the capital at that time, they can only take out a sixth.
????Like many of the funds run by ex-Goldman partners, Eton Park is renowned for its solid infrastructure, designed to attract institutional money. That's the kind of sticky money all hedge funds have been courting since 2008. It seems to be working. Last year, the industry ended November with $60.3 billion more in its coffers, despite the average 5% performance loss for the year, according to Trim Tabs. The net increase came entirely from direct investments, largely from pension funds, which plowed $69.7 billion into hedge funds through November. Such investors are notoriously slow to change investment allocations, and that might just be Eric Mindich's salvation.
